Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

AustinGold rebounded 0.5% to close above $1,850 as tumbling equities and renewed hopes for additional stimulus boosted demand for alternative stores of value. The metal ended the week down 0.5% to drop 2.4% for the month, pressured by rising Treasury yields.

Silver jumped another 3.8% today as internet chat forums like Reddit circulated short-squeeze recommendations on silver mining stocks and ETFs, like the GameStop stock recommendations that rocked equities and hedge funds this week. Silver tallied a 5.3% rise this week for a January gain of around 2%.

Wall Street fell sharply, with all three major US indexes plus the Global Dow losing 2%, as concerns about GameStop-related speculative bubbles and the slow vaccine rollout weighed on sentiment. For the month, the Dow fell 2% and the S&P 500 lost 1.1% while the tech-heavy Nasdaq added 1.4%.

Risk appetite was further reduced by weak data. Consumer spending fell in December for the second straight month as the resurgent pandemic closed businesses and increased layoffs. Separately, consumer sentiment soured in January, according to the University of Michigan survey. The National Association of Realtors said contracts for new home purchases declined in December for the fourth month.

New data shows inflation is steadily creeping higher. Fed's preferred measure, the core PCE, which excludes volatile energy and food costs, increased 1.5% last month, according to the Commerce Department. And labor costs rose 0.7% last quarter despite escalating layoffs, according to the Labor Department's Employment Cost Index.

US Treasury yields tracked higher with European sovereign bonds on reports that the ECB is unlikely to cut interest rates further into the negative. Rising inflation has also supported bond yields, pressuring gold this month, as investors demand higher returns for tying up cash for extended periods.

Higher yields weigh on gold by increasing the opportunity cost for holding the metal instead of bonds as a safe-haven asset. But in the longer term, higher inflation typically increases demand for gold as an inflation hedge, lifting prices.

The other precious metals were mixed for the day and lower for the week. Platinum rose 0.6% today but still lost 2.9% this week. Palladium fell 4.9% for a weekly decline of 6.6%.

At the Comex close: April gold gained $9.10 to $1,850.30; March silver jumped 99 cents to $26.91; April platinum rose $6.80 to $1,079.20; and March palladium dropped $113.90 to $2,208.40 an ounce.